The proposed FGN budget of N13.08trillion for the 2021 fiscal year tagged the “Budget of Economic Recovery and Resilience” was presented to the National Assembly on Thursday, October 8, 2020.
The realization of the budget is expected to accelerate the pace of our economic recovery, promote economic diversification, enhance competitiveness and ensure social inclusion. The budget represents an increase of 27% from the approved N10.3 trillion FGN budget for 2020.
The parameters & fiscal assumptions underpinning the 2021 appropriation
- Benchmark oil price of 40 US Dollars per barrel.
- Daily oil production estimate of 1.86 million barrels (inclusive of Condensates of 300,000 to 400,000 barrels per day).
- Exchange rate of N379 per US Dollar.
- GDP growth projected at 3.0 percent.
- Inflation closing at 11.95 percent.
FG revenue estimates
- Total distributable revenue is estimated at N8.433 trillion.
- Total revenue available to fund the 2021 Federal Budget is estimated at N7.886 trillion. This includes Grants and Aid of N354.85 billion, as well as the revenues of 60 Government-Owned Enterprises.
- Oil revenue is projected at N2.01 trillion.
- Non-oil revenue is estimated at N1.49 trillion.
Of the total revenue available to fund the budget, the projected oil revenue accounts for 25.5% while non-oil revenue accounts for 18.9%.
The planned 2021 expenditure
An aggregate expenditure of N13.08 trillion is proposed for the Federal Government budget in 2021. This includes N1.35 trillion spending by Government-Owned Enterprises and Grants and Aid funded expenditures of N354.85 billion.
- Non-debt Recurrent Costs of N5.65 trillion (43% of the budget).
- Personnel Costs of N3.76 trillion (29% of the budget).
- Pensions, Gratuities and Retirees’ Benefits of N501.19 billion.
- Overheads of N625.50 billion.
- Debt Service of N3.124 trillion (24% of the budget).
- Statutory Transfers of N484.49 billion.
- Sinking Fund of N220 billion (to retire certain maturing bonds).
Of the total proposed 2021 budget of N13.08 trillion, non-debt recurrent expenses accounts for 43% (N5.65 trillion). The cost of governance remains a cause for concern, as FG personnel costs, pensions and gratuities account for 33% of the budget, i.e. N4.262 trillion.
To service its debt obligations, the FG would be spending as much as 24% of the budget (N3.124 trillion), representing an increase of N445.57 billion from N2.68 trillion in 2020. Debt service obligation of N3.124 trillion, a total of N2.183 trillion (70%) has been set aside to service domestic debts, while N940.89 billion (30%) has been provided for foreign debt service. N220 billion is provided for transfers to the Sinking Fund to pay off maturing bonds issued to local contractors and creditors.
A budget deficit (inclusive of Government Owned Enterprises and project-tied loans), is projected at N5.20 trillion. This represents 3.64 percent of estimated GDP, slightly above the 3 percent threshold set by the Fiscal Responsibility Act, 2007.
The deficit is expected to be financed mainly by new borrowings totaling N4.28 trillion, N205.15 billion from Privatization Proceeds and N709.69 billion in drawdowns on multilateral and bilateral loans secured for specific projects and programmes.
The sum of N484.49 billion provided for Statutory Transfers in the 2021 Budget represents an increase of N56.46 billion (or 13 percent) over the revised 2020 provision. The Statutory Transfer provisions are made as follows;
- Niger Delta Development Commission – N63.51 billion.
- North East Development Commission – N29.70 billion.
- National Judicial Council – N110.00 billion.
- Universal Basic Education Commission – N70.05 billion.
- Independent National Electoral Commission – N40.00 billion.
- National Assembly – N128.00 billion.
- Public Complaints Commission – N5.20 billion.
- Human Rights Commission – N3.00 billion.
- Basic Health Care Provision Fund – N35.03 billion.
Of the total budget for statutory transfers, the National Assembly got the highest allocation of 26%, followed by National Judicial Council -23%, Universal Basic Education Commission – 14%, NDDC -13%, etc. The Public Complaints Commission and Human Rights Commission got the least -1% each.
A major part of the 2021 recurrent cost estimate of 37% of the budget (N4.888 trillion) is allocated to paying salaries and overheads. The recurrent expenditures (i.e. Salaries, Pensions, Gratuities and Retirees’ Benefits and overheads) for the MDAs providing critical public services include;
- N227.02 billion for the Ministry of Interior;
- N441.39 billion for the Ministry of Police Affairs;
- N545.10 billion for Ministry of Education;
- N840.56 billion for Ministry of Defence; and
- N380.21 billion for Ministry of Health.
The Ministry of Defence (17%), followed by Ministry of Education (11%), and Ministry of Police Affairs (9%) got huge shares of the budget allocation.
An aggregate sum of N3.85 trillion is being provided for capital projects as follows;
- N1.80 trillion for MDAs’ capital expenditure.
- N745 billion for Capital Supplementation.
- N355 billion for Grants and Aid-funded projects.
- N20 billion for the Family Homes Fund.
- N25 billion for the Nigeria Youth Investment fund.
- N336 billion for 60 Government Owned Enterprises.
- N247 billion for capital component of Statutory Transfers.
- N710 billion for projects funded by Multi-lateral and Bi-lateral loans.
The capital budget allocation is N1.16 trillion higher than the 2020 provision of N2.69 trillion. At 29% of aggregate expenditure, the provision moves closer to the Administration’s policy target of 30%.
Highlights of the 2021 capital projects
The key capital spending allocations in the 2021 Budget include;
- Power – N198 billion (inclusive of N150 billion for the Power Sector Recovery Plan);
- Works and Housing – N404 billion.
- Transportation – N256 billion.
- Defence – N121 billion.
- Agriculture and Rural Development – N110 billion.
- Water Resources – N153 billion.
- Industry, Trade and Investment – N51 billion.
- Education – N127 billion.
- Universal Basic Education Commission – N70 billion.
- Health – N132 billion.
- Zonal Intervention Projects – N100 billion.
- Niger Delta Development Commission – N64 billion.
The major chunk of the budget allocation for key capital projects goes to Works and Housing, followed by Transportation, Power, Water Resources, Health, Education, Defence, Agriculture, etc.
The 157% increase in the capital allocation to the health sector over the 2020 sectorial allocation is to enhance their capacity to deliver healthcare services through the procurement of requisite equipment, vaccines, and other facilities.
Government Fiscal Strategy in 2021
The government is aggressively implementing several and robust measures to overcome fiscal constraints that could impair on full budget realization.
The government shall be leveraging on technology and automation in the monitoring and management of Independently Generated Revenues towards addressing revenue leakages and redirecting scarce resources to the poor and vulnerable. These efforts include;
- Deregulation of the price of petroleum products.
- Ongoing verification exercise with IPPIS.
- Implementation of service-based electricity tariffs.
With the deregulation of the price of petroleum products, the new petrol pricing regime is expected to free up resources that were hitherto allocated to subsidize petroleum products. Similarly, the ongoing IPPIS verification exercise has closed gaps that encourage ghost workers or pensioners.
The service reflective electricity tariffs will help resolve liquidity crisis in the power sector and make the sector attractive to foreign investment. These reforms are expected to release trillions of Naira for allocation to other priority areas.
WTO: Okonjo-Iweala declared candidate with the largest and broadest support among members
Okonjo-Iweala has announced her excitement about being declared candidate with the largest and broadest support among members.
In an optimistic outlook, Dr. Ngozi Okonjo-Iweala has been declared the candidate with the largest, and broadest support among members of the World Trade Organisation (WTO) and most likely to attract consensus.
This was revealed by the former coordinating minister of the Economy herself, through her verified Twitter page.
Happy for the success & continued progress of our @wto DG bid. Very humbled to be declared the candidate with the largest, broadest support among members & most likely to attract consensus. We move on to the next step on Nov 9, despite hiccups. We're keeping the positivity going!
— Ngozi Okonjo-Iweala (@NOIweala) October 29, 2020
Backstory: Recall that Nairametrics had earlier reported that Okonjo Iweala is close to being appointed as the new Director-General of the World Trade Organization.
This is after a rigorous selection process that has seen the former minister of Finance scale through a lot of hurdles, making it to the top two.
What you should know: According to a press release by the Ministry of Foreign Affairs, the third and final round of the selection process of the Director-General of the World Trade Organization (WTO) was concluded on Tuesday, 27 October 2020 and the result was announced on Wednesday, 28th October 2020.
Dr. Okonjo-Iweala secured the support of the majority of the member-countries but is yet to be declared and returned the winner.
This is because apart from winning the election, all 164 member-states of WTO were expected to adopt the winner by consensus, in accordance with the rule of procedure of the WTO.
It is important to highlight that Dr. Okonjo-Iweala has secured cross-regional backing with only the United States opposing the consensus.
A meeting of the General Council of the WTO has been scheduled for 9th November, 2020 for the final decision on the election process.
What they are saying: Expressing her optimism in winning the race, Dr. Okono-Iweala said: “Happy for the success & continued progress of our @wto DG bid. Very humbled to be declared the candidate with the largest, broadest support among members & most likely to attract consensus. We move on to the next step on Nov 9, despite hiccups. We’re keeping the positivity going.”
Explore some Advanced Financial Calculators on Nairametrics
Nigeria’s Ngozi Okonjo-Iweala close to being announced as new DG of WTO
Ngozi Okonjo-Iweala is expected to be announced as the new DG of the World Trade Organisation.
Nigeria’s former Finance Minister, Dr Ngozi Okonji-Iweala, is close to being appointed as the new Director-General of the World Trade Organisation (WTO).
According to Reuters, a group of ambassadors also known as “troika” has proposed Ngozi Okonjo-Iweala to lead the WTO giving her a clear path to becoming the first woman to head the WTO since it started 25 years ago. The three ambassadors are thought to wield significant powers in determining what is a very “intricate and opaque” process.
Most Nigerian Media houses have already announced NOI as the winner of the process even though this is yet to be made official by the WTO.
The winner for the role of DG of WTO is expected to be announced formally by the WTO later today.
However, there appears to be a new twist, in the expected announcement of her emergence as the new Director-General of the WTO.
The United States through its representative at the WTO has insisted that the South Korean candidate is still in contention and that Washington will not recognize Okonjo-Iweala as the consensus candidate for appointment as Director-General.
As a result, the General Counsel of WTO, postponed the announcement of a new Director-General until November 9, after the US presidential election, after further consultations would have been made.
The announcement of Okonjo-Iweala, who is reported to have gotten the support of a vast majority of members states, including the EU, Japan and China, as the new boss of the World Trade Organization, would have been a huge boost for Africa
Kano State presents N147.9 billion budget for 2021 fiscal year
Governor Ganduje has presented the total sum of N147.9 billion as Kano State’s proposed budget for 2021 fiscal year.
Kano State Governor, Abdullahi Ganduje has presented the total sum of N147.9 billion as its proposed budget for 2021 fiscal year before the Kano State House of Assembly today.
Presenting the budget tagged “Budget for Economic Recovery and Sustainable Development,”Governor Ganduje said the budget is in furtherance of his administration’s vision for diversification of the state sources of revenue which will engineer development in the future.
Backstory: Recall that Nairametrics had earlier reported the drive and optimism by Kano State government to boost its Internally Generated Revenue. This might probably explain why IGR increased by almost 10% between 2020 allocations and proposed estimates for 2021.
What you should know: The breakdown of the budget verified by Nairametrics showed the following key highlights:
- The total budget increased by approximately 7.0% from N138.279 billion in 2020 to N147.935 billion in 2021.
- Capital expenditure for the periods under view increased by 10.93% from N60.485 billion to N67.095 billion.
- Recurrent expenditure also increased from N77.79 billion to N80.839 billion, indicating a 3.92%. increase for the periods under view.
- Internally Generated Revenue (IGR) increased by approximately 10% from N24 billion to N26.395 billion during the period under view.
- A breakdown of the budget showed that the Education sector has over N37 Billion representing 25% of the total budget while the health care delivery service has over N25 Billion representing 17% of the total budget.